As the COVID-19 outbreak hit India, many VCs did two things immediately, hit pause on new investments and check financial health of their current portfolio. For startups, it hit them like a wall of bricks as they were being advised to conserve cash and extend runway without expecting any fresh funding.
At Inflection Point Ventures, we did neither. We spoke to our portfolio companies in the spaces – Edu-Tech, Medical, B2B SaaS Companies etc- that are positively impacted by Pandemic. The founders we spoke to believe that their business will accelerate by 2 to 5 years. While it is great news for these start-ups, the founders out of their own wisdom, also see acceleration as a big challenge.
Leadership and Organizational maturity- challenges that come with scale.
When Business scales, the founder’s hubris will be replaced with Leadership qualities – Humility, Collaboration, People focus, Culture, focus on wealth creation and accountability for broader set of stakeholders- AND organizational wisdom that comes with Organizational maturity.
In normal times, when to scale would have taken 5 to 10 years, the founders would have had the luxury of time, mentoring, and personal experiences to mature from “a founder to a leader” and to build a matured Organization. BUT now, fortunate few start-ups that will scale, or should we say, will blitz scale, in post COVID world will not have the luxury of 5 to 10 years to scale, exacerbating the challenges.
“Founder to a Leader”
In our view, this transition is the most critical, and perhaps the hardest transition to make. Every founder need not be a good leader, and every good leader need not be an entrepreneur. An entrepreneur has a unique mental make-up, and good leadership at scale has a different mental make-up. The skills required to scale an organization goes over and above the skills to start an enterprise. Leadership at scale requires broader mind-set, deeper understanding of human dynamics, high emotional quotient, cultural sensitivity, and a bit of structure. Entrepreneurs who weaves the leadership at scale qualities will have a very bright chance to scale the business.
Organizational design: Start-ups by design are fluid in structure, and frugal, and that is how they should be. BUT with scale, structure starts to assume some importance. Start-ups should re-design their organization for scale, be it Org structure, incentive systems, People Policy, Risk Management Policy, Decision-making system etc. Start-up’s will find hard to trade fluidity with structure. There will be resistance, and new additions to the team meant to scale the Organization are intruders to the wild party. Founders play critical role in balancing the emotions & expectations from the old guards and new crusaders. Founders should show unwavering commitment to the long-term vision of the Organization and should make hard choices for roles that are critical to scale the business.
Delegation and empowerment: A good Organization design should come with delegation and empowerment. Founders should find right people and delegate a very large part of their operational band width. Founders time should be diverted more towards Organization wide initiatives, Strategy, meeting Customers, visiting other Geographies to learn and collaborate, or any other activities that bring more valuer per minute of their time. Letting go will be hard, as this will create illusion of losing control. Founders must fight hard to curb the tendency to go back to the day to day affairs.
Performance Management System: Delegation and Empowerment should be accompanied by accountability. The Founders are the only ones who were accountable in the initial phase, and now they must move the accountability into deeper broader trenches of the Organization. This too will be a hard transition for Founders. Founders are crusaders, who believe in hand crafting their destiny, and with the transfer of accountability, the founders are putting their destiny in others hand.